Oil prices fall to six-week lows as US production hits record highs

Oil prices on track to fall for fifth consecutive day after EIA data showed US crude production hit 10.25 million b/d and the Forties pipeline restarted following a shutdown. Nexen photo.

Oil prices down over 1 per cent Thursday

Oil prices dipped to their lowest level in six weeks on Thursday after data from the US Energy Information Administration showed US crude production hit record highs last week and reports that the Forties pipeline was reopened.

By 2:10 p.m. EST, Brent crude was down 82 cents to $64.69/barrel, the lowest since Dec. 22. US WTI fell to its lowest mark since Jan. 3, dropping by 73cents to $61.06/barrel. The Canadian Crude Index rose 4 cents to $32.54.

The declines put both Brent and WTI on track to fall for a fifth straight day, the longest losing streak for Brent since November of last year and WTI since April 2017.

Since hitting a four-year high in late January, Brent futures have lost almost 10 per cent.

On Wednesday, the US EIA reported US crude production hit 10.25 million barrels per day (b/d) last week. At this level of production, the US will overtake OPEC’s largest producer, Saudi Arabia.

The restart of the Forties pipeline also impacted oil prices. The UK pipeline was shut down Wednesday due to an unexpected closure of the feed control valves. Prices rose shortly after the the closure was announced, but settled down as the session progressed.

“It is now clear that oil prices in late January were too high to keep the oil market balanced in the long term,” Reuters reports Commerzbank analysts wrote. “This is because U.S. oil production is now rising so sharply that there is a risk of renewed oversupply if OPEC does not voluntarily renounce market share.”

Early in the week, the EIA forecast US production will jump to an average of 10.6 million b/d in 2018 and 11.2 million b/d in 2019. In 2017, the US produced 9.3 million b/d.

Chinese demand for crude continues to rise. China imported a record 9.57 million b/d in January, according to official customs data.